What kind of liability risks does a small business face in Ontario?

Running a small business doesn’t come without its own set of risks. It’s unfortunate, but small businesses are especially sensitive to certain risks due to their lack of experience and limited financial resources. Identifying these risks is the first step to addressing and managing them.

Many insurance companies offer the comprehensive commercial general liability insurance Ontario businesses need to protect themselves against liability risks that may threaten the operations of their company. Depending on that business, more than simply CGL insurance may be required to protect against prospect exposures. Let’s go over some of the most common liability risks faced by small businesses insurance Ontario.

Customer or employee injuries

Slips and falls are more common than you’d think, and as long as you have a physical presence or interact with clients, vendors, or even window-shoppers on any level, there’s a risk that someone might be injured. This risk doesn’t just apply to your place of business, either. Injuries can happen at a client’s home while an employee of yours is there doing work.

Some industries are obviously more at-risk than others. Amusement parks, petting zoos, retail stores, go-kart tracks, recreational facilities, bars, clubs, etc. might see higher claims made for bodily injuries. It pays to know the kind of risks your business might be more prevalent to and take necessary measures to protecting your work.

While a CGL policy will cover injuries to third-parties not employed by your business, it won’t cover any employee injuries. You’ll need a worker’s compensation insurance policy to protect your business for costs relating to your employees’ injuries or illness, which offers a settlement in exchange for an agreement not to sue or, if your employee sues, any consequential court costs. Ask a broker about how to further insure yourself for injuries to employees.

Property damage

Property damage can happen in a number of different ways. It can take place on your business property – i.e., imagine a waitress of yours serving a client and they bump the client’s elbow, causing them to drop their phone on the floor. The phone cracks. The client sues for damages.

It can also take place at a client’s home. You have a subcontractor working on a repair job in someone’s bathroom, and they drop a hammer. The hammer cracks the tiled floor, and the client sues for damages.

An expensive example of property damage liability would be if you were an autobody repair shop owner and someone brought their car in for a maintenance job. While being lifted up on the hydraulic plate, an employee accidentally drops the client’s car too soon and the car crashes down, resulting in significant and possibly very expensive damages. The client might sue.

Companies that deal with client’s property or go to client homes need to be aware of how to mitigate the risk of property damage. Proper training, attention to detail, and rigorous hiring processes can go a long way to prevent this risk.

Product malfunction or defect

If your business deals in the offering of a product, whether that’s a physical product that it manufactures, sells, or even a food/beverage product that it cooks, mixes, or bakes, there’s the risk that product might malfunction and cause harm.

Product liability insurance can cover damages or injuries/illnesses due to product malfunction if the product is assembled or manufactured wrong as well as if there’s a flaw in the design of the product, resulting in the injuries or illnesses caused.

Product recall insurance goes together with product liability, covering the costs of returning the products back to the original distributor, disposing safely of the product, and notifying customers of the recall. It can also help to recoup your reputation following a recall event.

Security risk

Cyber risk can impose huge risks to small businesses and their finances, and even cause reputational injury to a smaller business as a result of a failure in their computer systems.

As technology advances, so does the threat of security risk. Hackers know how to break into sensitive systems through weak spots – employee emails, insecure networks, personal data thieved from workers, etc. The combination of more data being utilized online and hackers gaining traction presents a potent security risk. This must be actively monitored and dealt with via sophisticated security protocols. Cyber risk insurance can also help protect your business if an attack does happen.

In most instances, all these risks would be covered by insurance – the right insurance. Work with a broker to determine a sufficient coverage plan for your business.